Israeli start-up salaries: Silicon Wadi nears Silicon Valley
A survey obtained by "Globes" reveals that the local high-tech industry
pays very well - maybe too well, for investors.
by Batya Feldman
Globes
July 24, 2008
The prevailing view, both internationally and in Israel, is that high-tech
employees earn a fortune. This view is usually accompanied by negative
sentiment as well, since the employees in question are usually fairly
young, and starting their professional careers with a handsome salary
that would take people, in other fields years, to earn. This perception is
actually not entirely removed from sreality. "Globes" has obtained a copy
of a survey commissioned by leading institution in Israel's high-tech
sector.
The survey looked at 350 companies and provides a rare glimpse into the
size of the salaries and bonuses that start-ups are paying. The figures
known so far on the high-tech industry do not relate to start-ups alone,
and when employment and placement agencies publish salary tables,
they generally include those of local and foreign R&D centers, as well as
large Israeli companies and local offices of international companies.
The survey, whose author and commissioning company both asked that
their identities not be disclosed, reveals that a CEO of a start-up with up
to 50 employees earns NIS 60,000 a month, while his colleague who
manages a company with up to 100 employees can earn NIS 100,000
a month. A R&D team leader will earn, on average, a gross salary of
NIS 30,000 a month, an algorithm engineer can earn NIS 20,000,
a senior project manager can earn NIS 30,000, while a systems architect
earns NIS 33,000, on average, a month.
The levels of pay for staff and management at start-ups is a closely-guarded
secret and all those concerned have an interest in ensuring it remains
that way. Managers of young companies, and even the more mature ones,
know that if the secret gets out, their bargaining power will be reduced
since candidates will know what the average salary is for the job they're
applying for.
Investors in companies like these have a similar interest for the same
reasons, and employees sometimes wish to be thought of as high fliers
raking in huge salaries every month. It is less endearing to be thought of
as a modern slave who works his fingers to the bone and has to make
do with a modest salary at the end of every month.
Disgruntled Americans
The most important finding of all to emerge from the survey is that salary
levels at Israeli start-ups are fast catching up with those in Silicon Valley,
and the blame for this lies squarely with the faltering dollar. A gross
salary of NIS 40,000 month, which was once worth $96,000-107,000
a year on the basis of an exchange rate of NIS 4.5-5/$, has now risens
to $140,000-145,000 a year. The dollar has rallied slightly over recent
days, but unless some courageous action is taken, this finding will have
a decisive effect on the local industry.
The calculation is simple: If an entry-level software engineer can earn
$70,000-80,000 a year, and his Israeli counterpart earns NIS 25,000-30,000
a month, which comes to $90,000 - 100,000 a year at the current exchange
rate, US investors will start asking whether it is worth their while operating
in Israel. Furthermore, the total salary costs of employees in Israel are
higher than those in the US.
The survey also reveals that while levels of pay for junior staff in Silicon
Valley are on a par with those in Israel, the gap at the executive level
still exists, and CEOs, senior sales and marketing managers in the
US still earn far more than their Israeli counterparts.
Salary costs at start-ups are important, since they account, on average,
for 70% of a company budget. These are high both in Israel and in
Silicon Valley, but they are singularly important, since choosing a quality
team, especially the initial team which sets up the company and builds
its base, will affect the company's fortunes throughout its life.
The figures also reveal that salaries at life science companies are lower
than those at IT and telecommunications companies. Additionally,
the salary range for staff in the various companies in the technology
sector are not large in some fields, and generally range from NIS 20,000
a month for an algorithm engineer to NIS 37,000 a month for a systems
architect or R&D manager.
Taxing time
All these figures, it should be remembered, represent gross salaries,
so most of them will be liable to tax of 45%,(depending on the salary
level) and at least NIS 2,000 a month for a company car that many
people are convinced they're getting for free. After deducting other taxes
- such as national insurance, executive insurance, and pension
contributions - the sum employees are left with is a lot more modest.
What's more, it should be remembered that employees at start-ups,
large and small alike, may get good salaries, but they have to work hard
for them.
Large and publicly-traded companies - not those in the high-tech sector -
usually adopt a "corporate enterprise culture," which, to put it in simpler
language, means that most people go home at 6:00 pm. In start-ups,
on the other hand, mainly, but not only in R&D and testing departments,
employees often work more than 13 hours a day and that does not include
the grueling trips they are required to make abroad. Moreover, the
employment contracts for employees nearly always stipulate that the
salary is global and that there is no extra pay for overtime.
Bonuses
There is also some good news, especially for managers. The survey
shows that companies pay bonuses, which are usually performance-related.
A CEO of a start-up with up to 100 employees can take home an extra
NIS 80,000 a year, if the company's performance meets targets.
A CEO of a younger company will receive a bonus of NIS 40,000,
on average, a year, for meeting the targets.
The large bonuses at start-ups usually go to the sales team, for whom
they are inherent component of their salaries. A sales manager at a
large start-up can earn up to NIS 160,000 a year for good results,
while his colleague at a smaller start-up can earn up to NIS 143,000.
Marketing managers at large companies can earn up to NIS 35,000
extra in bonuses a year, and NIS 8,000 at smaller companies.
This might not sound like much, but it is nonetheless nice to get.
Average monthly managerial salaries in technology start-ups:
Development team leader: NIS 30,000
Senior development team leader: NIS 35,000
Development manager: NIS 36,500
Senior software team leader: NIS 30,000
Senior software engineer: NIS 27,000
DSP engineer: NIS 25,000
Algorithm engineer: NIS 20,000
Average executive salaries in start-ups with up to 50 employees/up to
100 employees:
CEO: NIS 60,000/NIS 100,000
COO: NIS 48,000/NIS 57,000
Business division manager: not applicable/NIS 50,000
R&D manager: NIS 45,000/NIS 50,000
VP technology: NIS 45,000/NIS 47,000
Business development manager: NIS 41,000/NIS 50,000
CFO: NIS 36,000/NIS 45,000
Average salaries in life sciences start-ups:
Biologist: NIS 10,000
Bioinformatician: NIS 13,500
Clinical study coordinator: NIS 18,500
Medical manager: NIS 38,000
Research expert: NIS 29,000